Optimization of carbon performance evaluation and its application to strategy decision for investment of green technology innovation

Abstract

Carbon regulation and the mechanism of carbon emission right motivate firms with high carbon consumption and emission to transition to a production and operation model with higher carbon usage. Green technology innovation is the usual way out, with carbon performance metrics serving as guideposts along the route. The intersection of the two topics is the focus of this study. The carbon performance evaluation is optimized by taking carbon asset variance into account. This criteria investigates investment in green technology innovation for its relationship with carbon performance, and investment plans are assessed and determined for the optimum carbon performance based on a stochastic model using geometric Brownian motion for Monte Carlo simulation and prediction. Strategy design of green technology investment is optimized by comparison among a series of proposed schemes, and the conclusions based on case study are applicable for similar situations of enterprises with carbon consumption. The following are the ways in which this research contributes. 1) Improvement of the carbon performance measure by the addition of carbon asset modifications. 2) The practical application of carbon performance, which serves to direct management practice, is illustrated and realized.

Keywords: Carbon emission right; Carbon performance; Green technology innovation; Investment strategy.